EIA data for the coal industry in 2016 shows U.S. coal production declining significantly, 17% lower than in 2015 and at its lowest level since 1978.
Low natural gas prices (see: Natural Gas: Now and Later), warmer-than-normal temperatures during the 2015-16 winter that reduced electricity demand, the retirements of some coal-fired generators (see: The Difficulty of Bringing Back Coal Jobs), and lower international coal demand have contributed to an eight-year decline in U.S. coal production.
Nearly all coal use in the United States is used for electricity generation where it has faced increasing competition from natural gas and renewables (see: Power Producers and Clean Energy p.II). The average daily natural gas spot price at the Henry Hub, a key benchmark, fell from $2.63 per million British thermal units (MMBtu) in 2015 to $2.40/MMBtu in 2016, resulting in increased natural gas-fired electricity generation.
In 2016, natural gas-fired electricity generation also surpassed coal-fired generation for the first time, accounting for an estimated 34% of total electricity generation compared with coal’s 30% share. The most recent Short-Term Energy Outlook forecasts total 2016 power sector coal consumption at about 681 MMst, the lowest level since 1985.
New generation capacity additions estimated by the EIA for 2016 also show dominance of solar, natural gas, and wind power over other power sources. Coal was expected to have negligible additions.
U.S. coal exports also declined in 2016 on the lower international coal demand. Approximately 26 MMst of coal were exported to Europe in 2016, down nearly a third from 38 MMst in 2015. Coal exports to Asia, particularly to South Korea, declined as well. Exports to South Korea saw a 43% decrease from the 2015 level. The EIA estimates that the United States exported 57 MMst of coal in 2016, a 23% decline from 2015.